IPCybercrime.com, Luxury Brands Assist Feds, Shut Down Spam Network

On Tuesday, an Illinois district court ordered a vast international spam network to shut down, stopping what the Federal Trade Commission (FTC) says was one of the most prolific spam gangs on the Internet. The group, which used names like HerbalKings, Inet Ventures, Tango Pay, Click Fusion, and TwoBucks Trading Limited, sent billions of unsolicited messages to Internet users over the last 18 months touting luxury goods, counterfeit pharmaceuticals and pornography, according to the commission.

“These people have been a thorn in my clients’ sides for a couple of years now,” said Rob Holmes, CEO of IPCybercrime.com, an investigative firm retained by two of the world’s largest luxury brands to curtail their spam problem. It is Holmes’ common practice to network outside the anti-counterfeiting community for collaboration. “Sometimes, what is sawdust on my floor is the last piece of a puzzle for another investigation.” Holmes says that at times up to one-third of all of the unsolicited emails are promoting replica watches.

To pummel Internet users with its solicitations, the spammers used the Mega-D/Ozdok botnet to peddle the replica luxury items, as well as penile enhancement pills, according to FTC filings. To make matters worse, the spammers also claimed to provide secure connections for transactions on their websites, when in actuality none of the sites provided encrypted sessions with SSL as asserted, according to the FTC.

The investigation provides a clear window into the business of modern spam, which by some estimates accounts for 90 percent of all email messages sent over the Internet. Investigators also said they monitored the group’s finances closely and that it cleared $400,000 in Visa charges in one month alone. “They were sending extraordinary amounts of spam,” said Jon Leibowitz, an FTC commissioner. “We are hoping at some level that this will help make a small dent in the amount of spam coming into consumer’s in-boxes.”

The FTC has brought over a hundred cases against spammers over the last ten years, but officials said this was perhaps the most extensive spam operation it has ever encountered with ties to New Zealand, India, China, Australia, and the United States. The commission asked the court to freeze the gang’s finances under the CAN-SPAM Act of 2003, a U.S. law that provides civil penalties for spammers who falsify data in emails and fail to offer ways for recipients to refuse future messages.

The U.S. government is also pursuing criminal charges against the group. FBI investigators in Chicago and St. Louis have executed search warrants against people they believe to have been members of the spam gang, including Jody Smith, 29, of McKinney, TX. U.S. officials are also working with New Zealand authorities in the case against Lance Atkinson, 26, a New Zealand native now living in Australia.

As with other criminal groups online, the activities of this replica watch spam group were remarkably international in scope. The group was illegally selling counterfeit watches and shipping them out of China. The commission also said the group was basing its websites in China where bullet-proof hosting is common, fulfilling credit cards from the Republic of Georgia and the Mediterranean island of Cyprus, and transferring funds between members using ePassporte, an electronic money network.

Steve Wernikoff, an attorney with the FTC, issued personal thanks to many individuals, including Mr. Holmes, for their organized efforts during the investigation. “Valuable information and resources assisted this effort,” Mr. Wernikoff stated.